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Would You Pay 7x EBITDA for a Background Check Business?
Dec 6, 2024
Dive into the intriguing world of a California-based background check business, where Michael and Heather analyze its financials and unique market position. With a $7 million asking price and $1.1 million cash flow, they explore its competitive edge and proprietary systems. The discussion highlights challenges posed by tech disruptions and the industry's resistance to digitization. They also delve into banking dynamics amid rising interest rates, dissecting the emotional toll of entrepreneurship in the business acquisition landscape.
27:07
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Quick takeaways
- The podcast highlights the significant cash-only purchase requirement for a 25-year-old background check business, which raises questions about its market appeal and buyer limitations.
- The discussion emphasizes the company's unique competitive edge in criminal background checks through proprietary technology, while also addressing risks posed by emerging tech disruptions in the industry.
Deep dives
All-Cash Offer Insights
The deal discussed features a unique stipulation that potential buyers must provide cash for the entire purchase, with no financing options available. This approach raises questions about the market strategy, as requiring all-cash buyers might significantly limit the pool of interested parties. While it could imply the seller's confidence in the property being a highly desirable asset, it also appears to deter various types of buyers who typically leverage financing in transactions. This unusual requirement challenges conventional practices and invites speculation on whether the sellers believe this business is positioned to attract funds quickly.
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